Wall Street Breakfast: Must-Know News

May 04, 2012 7:24 AM ETMETA, SPY, QQQ, AVP, BAC, CHK, EADSY, FSLR, TRP, UAL, WMT, AABA, AIG86 Comments
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Wall Street Breakfast

Top Stories
"People's" Facebook valued at almost 100X profit. Facebook (FB) may sell up to $13.6B in stock, including with the over-allotment option, after pricing its IPO at $28-$35 a share. That would give it a market cap of $77B-$96B, or as much as 96X its 2011 net profit of $1B. Facebook could allocate a relatively large 20%-25% of shares to retail investors, the NYT reports, as it sees itself as the "the people's company." Opinion: Facebook's variable ad revenue.

Unemployment seen steady at 8.2%. Nonfarm payroll data for April is due out this morning, with economists expecting that the figure climbed by 165,000 following a 120,000 gain in March, and that unemployment stayed steady at 8.2%. CNNMoney notes that the rate would be over 11% if the 6M who say they want to work but haven't looked a job in the last four weeks were to start applying again. Opinion: Payroll report a tipping point for equities?

United Airlines set to make $10B Boeing order. After trailing badly last year, Boeing is set to further catch up with Airbus (OTCPK:EADSY) in the dogfight of the narrowbody jets, with Reuters reporting that United Airlines (UAL) is putting the finishing touches on an order for at least 100 737 planes. The deal is worth up to $10B at list prices and could increase to 200 aircraft. Opinion: Business is booming for Boeing.

Top Stock News
Avon jumps as speculation of bidding war strengthens. Bloomberg has firmed up speculation that Richmont Holdings is putting together a bid to rival the $10B offer from Coty that Avon (AVP) rejected last month. Richmont's founder is John Rochon, the former CEO of Avon rival Mary Kay. It's not the first time Rochon's been after Avon, having led an attempted takeover in the 1980s and 1990s. Avon closed +5.5% and gained a further 3.2% AH. Opinion: Avon's high dividend in danger.

First Solar names new boss but badly misses Q1 forecasts. First Solar (FSLR) yesterday reported an unexpected Q1 loss and named Chief Commercial Officer James Hughes as CEO to replace interim boss Mike Ahearn, who's also Chairman. First Solar swung to an EPS of -$0.08 from +$1.33 last year, missing by $0.67, while revenues dropped 27% to $497.1M and also fell short. Still, shares were only -1.5% post-market, possibly because First Solar raised its 2012 EPS guidance. Opinion: First Solar's huge restructuring loss.

AIG profit surges. AIG's (AIG) Q1 net profit more than doubled to $3.21B from $1.3B a year earlier, when the the insurer booked charges in connection with the repayment of a Fed credit line. Adjusted EPS came in at $1.65, above consensus of $1.12. AIG also benefitted from gains from investments, including from its stake in AIA Group. Opinion: Businessweek's slanted hatchet job on AIG

TransCanada to try once again for Keystone authorization. TransCanada (TRP) will today reapply for Presidential approval of the section of the Keystone pipeline that crosses the U.S.-Canada border, The Washington Post reports. TransCanada has altered the part of the route that runs through Nebraska in order to allay ecological concerns, although environmentalists still aren't happy. Opinion: Keystone or not, TransCanada still wins.

Yahoo to review "inadvertent error" of CEO's academic record. Yahoo's (YHOO) board will review the false claim that CEO Scott Thompson has a computer science degree, as stated in company documents, when in fact he only has one in accounting, the company tells Reuters. The discrepancy came to light after questioning from activist investor and Yahoo bete noir Dan Loeb. Letter to Yahoo: Dan Loeb questions Thompson's credentials.

Wal-Mart gets another lawsuit over bribery claims. A California pension fund is suing Wal-Mart's (WMT) board for mishandling allegations that officials knew about a bribery scandal in Mexico and covered it up. The lawsuit claims "gross misconduct by Wal-Mart's executive officers and director," and adds to one from a shareholder in April. Opinion: Wal-Mart: Best discount store stock?

Banks face yet another mortgage-bond probe... New York AG Eric Schneiderman and his Delaware counterpart Beau Biden are investigating banks for failing to package mortgages into bonds as advertised to investors, Bloomberg reports, with sources saying that failure may have led to improper foreclosures. Opinion: Wells Fargo could plummet from foreclosure issues

...and BofA faces yet more liabilities. Bank of America (BAC) is in early stage talks with lawyers representing over 1,000 former Merrill Lynch brokers about a settlement that could cost the bank hundreds of millions of dollars, the WSJ reports. The brokers, who left the firm after BofA's 2009 takeover, claim they're owed deferred compensation. Opinion: 3 reasons to invest in BofA now.

SEC inquiry into Chesapeake confirmed. Chesapeake Energy (CHK) has confirmed that the SEC has notified the company and CEO Aubrey McClendon that the agency has opened an informal inquiry, and has requested to retain certain documents. Chesapeake doesn't say what the investigation's about, but it's not hard to guess. Opinion: The bullish case for Chesapeake.

Top Economic & Other News
Europe holds its breath as France and Greece vote. Democracy may strike back this weekend as France and Greece hold elections that could have far-reaching consequences for the eurozone's austerity drive. Francois Hollande, who wants to tone it down, is the favorite to win in France, while the two status quo parties in Greece may barely scrape together enough votes to keep the bailout/austerity ball rolling. Opinion: Why I disagree with a euro divorce.

Today's Markets:
In Asia, Japan closed. Hong Kong -0.8%. China +0.5%. India flat.
In Europe, at midday, London -0.6%. Paris -0.0%. Frankfurt -0.3%.
Futures at 7:00: Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude -1.2% to $101.28. Gold -0.3% to $1630.30.

Today's economic calendar:
Monster Employment Index
8:30 Nonfarm Payrolls

Notable earnings before today's open: AEE, AES, AON, ARCO, BPO, CHD, DUK, EL, EXC, ITT, MFA, POM, PPL, SE, WCRX

See full real-time earnings coverage »

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